UNITED STATES v. GRIFFIN

UNITED STATES DISTRICT COURT, DISTRICT OF COLUMBIA

January 19, 1982

UNITED STATES of America, Plaintiff,
v.
Gary L. GRIFFIN, Defendant

The opinion of the court was delivered by: GREEN

MEMORANDUM OPINION

Presently before the Court is plaintiff's Motion for Summary Judgment pursuant to Fed.R.Civ.P. 56 and opposition thereto. The United States instituted this suit on September 4, 1980 to recover payments on two student loans insured by the United States Office of Education under the Higher Education Act of 1965, as amended, 20 U.S.C. § 1071 et seq.

There is no dispute that defendant obtained two student loans by executing promissory notes to an eligible lender upon receiving federal loan insurance from the Office of Education (OE). The promissory notes were executed on November 3, 1975 to the Washington Drafting School. The loans totaled $ 1,000.00 at 7% simple interest per annum. Defendant attended the Washington Drafting School from October 1975 through October 1976.

By way of defense, defendant asserts that he lacks "sufficient information to admit or deny default upon the obligations or the amount due and owing under the obligations," and therefore he "denies these allegations and demands strict proof thereof." See Answer at P 10. The documents presented to this Court, however, clearly indicate that defendant defaulted on his loans and reflect the amount owed with specificity. Loan information submitted indicates that the loan is long overdue, and defendant does not contend that he has made any payments.

Defendant's Opposition to Motion for Summary Judgment is replete with documents concerning the inadequacies and problems of WDS and Lacaze, but they are neither relevant to the time period of 1975-1976, the period during which defendant attended the school, nor conclusory of any defenses that defendant might have. Defendant admits that OE had no actual knowledge of defendant's individual experience with the lending institution.

Defendant alleges that OE was aware of the school's problems and, therefore, was on "inquiry notice" of possible defenses. This argument fails for two reasons. First, it is the principal's responsibility to notify the surety of any proffered defenses prior to the payment of a claim. "If the principal has a defense he has the burden of notifying the surety." Restatement of Security § 108 comment c (1941). See Great Am. Indem. Co. v. Garrison, 75 F. Supp. 811, 814 (E.D.Wash.1948). See also New Hampshire Fire Co. v. Perkins, 30 F.R.D. 382, 384 (D.Del.1962) (court recognized comment c as a sound principle although not applicable to the facts at bar). Defendant was notified that his loan was in default, but, by his own admission, did not contact OE. Second, the information received by OE, which defendant alleges should have placed the government on "inquiry notice", was primarily related to post-1976 school problems and did not reflect problems at the school in 1975-1976. Plaintiff has produced affidavits stating that only two complaints were filed with OE criticizing the quality of education at WDS concerning the period from October 1975 to October 1976. Affidavits presented by the defendant concerning discussions in 1978 between OE and Neighborhood Legal Services Program do not contain information as to whether or not defendant's individual complaints were discussed. On the other hand, affiants for plaintiff specify that only the problems of then currently-enrolled students were discussed. OE was clearly unaware of any defenses that defendant might have raised when the loan was paid in late 1978.

Our website includes the main text of the court's opinion but does not include the
docket number, case citation or footnotes. Upon purchase, docket numbers and/or
citations allow you to research a case further or to use a case in a legal proceeding.
Footnotes (if any) include details of the court's decision.

Buy This Entire Record For
$7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.